Crude and product prices plunge in Singapore
Crude and product prices plunge in Singapore
SINGAPORE (Reuter): Crude oil and product prices in Singapore plunged early yesterday, reflecting the erosion in the West, but traders said well-supported fundamentals in Asia will limit any downside potential in prices.
"Prices are down because of the sharp sell-off on NYMEX (New York Mercantile Exchange)," an oil trader said. "But their downside will be limited because fundamentals in the East are still well-supported.
"We could see a drop of about 50 cents per barrel on gas oil but I certainly don't expect more than US$1 erosion."
Crude oil and product prices on NYMEX plunged on Thursday following a breach of key technical support levels, triggering massive liquidations of long positions held by fund managers over the past three months.
February West Texas Intermediate crude fell 88 cents to $18.79 per barrel and continued to trade four cents lower on NYMEX ACCESS.
As a result, February Brent crude on the Singapore International Monetary Exchange (SIMEX) was bid/asked at $17.80/$17.90 per barrel early yesterday, down at least 62 cents from its previous close.
The Singapore swap products market saw active trade on profit- taking interest, with February done at $24.50, $24.55 and $24.60 a barrel, almost $1 below Thursday levels. Sellers dominated the market.
High sulfur fuel oil saw offers only, with second-half January at $116, February at $110 and March at $104 per ton, all down around $2 from overnight.
Naphtha fell between 55 and 85 cents to $17.20/17.60 per barrel.
Supplies
Traders here felt prices might rebound late yesterday after the panic subsides as fundamentals retake center-stage.
"What happened in the West was technically-driven," an oil trader said. "In Asia, it is not the same. We do not have the large numbers of fund managers that are long and the East is generally a fundamentally-driven market."
Traders added supplies of gas oil, jet kerosene fuel and the residual fuels were tight and regional demand for these products remained strong, notably from India and Indonesia.
India was widely expected to buy at least 850,000 to one million tons of gas oil in its tender for March deliveries.
Indonesia was estimated to need at least 1.8 million barrels of gas oil and about 800,000 tons of jet kerosene fuel in February.
"None of them has covered their demand yet." the oil trader said. "Regional supply will stay tight. There is a lack of available vessels to bring cargoes from Europe to Asia and the earliest any cargo can arrive will be late February."